Legislation would Double Earned Income Tax Credit and Make Millions More Americans Eligible, Including Students and People Caring for Children and Aging Parents; 50 Million Americans would Get $3,000 to $12,000

Wednesday, February 13, 2019

WASHINGTON, D.C. – Today, U.S. Senator Sherrod Brown (D-OH) joined U.S. Representatives Ro Khanna (D-CA) and Bonnie Watson Coleman (D-NJ) to announce plans to reintroduce legislation that will give American workers a ‘Cost-of-Living Refund’ to compensate for decades of rising costs and stagnant wages. The members announced their legislation this week as news reports indicate that Americans are receiving smaller refunds than expected under President Trump’s tax law.

Similar to legislation introduced last Congress, the Senate bill would:

Roughly double the Earned Income Tax Credit for working families, increase the credit for childless workers almost sixfold, and make millions more Americans eligible. Roughly 50 million Americans would get anywhere from $3,000 to $12,000 back in their pockets under this provision of the bill.

For the first time, extend the credit to students and people raising children or caring for aging parents and other relatives;

A recent study by AARP and the National Alliance for Caregiving found that almost 40 million Americans are providing unpaid care. A study by GAO found that almost a third of all college students experience food insecurity.

Allow people to claim an annual $500 advance on the credit, interest free, in order to cover emergency expenses. This provision provides an alternative to predatory, payday lenders.

In the House, Khanna and Watson Coleman are proposing a pair of bills to achieve the same goals. Khanna and Brown introduced legislation to expand the Earned Income Tax Credit last Congress and Watson Coleman championed efforts to expand the credit to students and caregivers.

“All across the country, hard work isn’t paying off like it should. Corporate profits have soared, executive compensation has exploded, but wages are flat. Meanwhile the cost of everything from healthcare to education and housing is up,” said Brown. “We need to put more money back in the pockets of working people and that’s what this bill does.”

“The EITC is already proven at lifting people out of poverty. By strengthening it to reach more families and individuals, it can have a lasting impact on our economy. In this modern age of automation and globalization, where work is sometimes seasonal and hours are often curtailed, this bill provides every hard-working American with a fair income for their labor,” said Khanna.

“We know that the economy isn’t working for most Americans. We also know that for years, the EITC has worked to lift people out of poverty. Expanding eligibility for this credit to those seeking better lives through higher education or working the equivalent of a full-time job to care for a family member just makes sense,” said Watson Coleman. “If we can cut taxes for billionaires and corporations, we should be chomping at the bit to help people striving for the middle class,” said Watson Coleman.

The bills Brown, Khanna and Watson Coleman plan to introduce this week would roughly double the EITC for working families and increase the credit for childless workers almost sixfold. Under the proposal, the maximum tax credit available increases to $12,349 for families with three or more qualifying children; $10,976 with two qualifying children; $6,370 with one qualifying child; and $3,054 with no qualifying children. Currently, a family of three can receive a maximum credit of $6,431 and someone with no children can receive at most a $519 tax credit.

The bill would allow for a worker with no children who makes up to $38,498 annually to still be eligible to receive the tax credit and covers a family with three or more children making up to $78,804 a year to receive the EITC. The current maximum qualifying income to receive the EITC is $15,270 for childless workers and $49,194 for families with three or more children.

The legislation also includes new language to expand the credit so that individuals taking care of children or aging parents can claim the credit as well as students who are working to support themselves as they pursue their education.

The bills also recognize many Americans live paycheck to paycheck and includes a provision that would provide an Early Refund EITCas an alternative to payday loans and other predatory lending products, which typically carry exorbitant fees and charges. Payday loans are generally made to individuals who are working and often eligible for the EITC. The average payday loan is about $375. This provision of the bill aims to breaks the cycle of debt by offering workers the opportunity to annually claim a one-time, $500 advance on the EITC for the following taxable year.

The proposed EITC expansion would be phased out at higher income levels and remain fully refundable.

Earlier this year, Brown introduced a pair of bills with Sen. Dick Durbin (D-IL) to encourage corporations to invest in their workers. The Patriot Employer Tax Credit Act would provide a tax credit to companies that provide fair wages and good benefits to workers. This is the first bill introduced by Durbin in the 116th Congress. The Corporate Freeloader Fee would levy a fee on large mega-corporations that are often extremely profitable yet pay their workers poorly.

Brown is also working on legislation to improve and strengthen the Child Tax Credit for families with young children.